Momentum Monday - Something for Everyone as The Bull Market Broadens

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Good morning everyone.

As always, Ivanhoff and I got together to tour the markets looking for trends and momentum. It Is not hard to find great rends across many sectors and the world as we turn to July and the second half of 2023.

We shared a few new ideas that are underfollowed including a ‘nuclear component’ company $BWXT. Airlines, Industrials, Argentinian Banks, Homebuilders…a lot of strength.

You can watch this weeks episode right here on YouTube. I now include the ‘chapters’ of the show so you can easily move around the video to find what you are interested in.

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Chapters:

• Welcome (0:00)

• Best Quarter Ever, NASDAQ 100 (1:57)

• Travel and Leisure (2:54)

• Where’s the Strength? (5:15)

• China Weakness, Meta Strength (5:40)

• Not Surprised by Apple (7:47)

• Underperformers (10:40)

• The Blockchain is Coming (12:02)

• Inside Energy, Nuclear Next? (15:43)

• International Ecommerce (18:22)

• Chip Stocks Take Off (19:28)

• Banks and Argentina (21:12)

• Ukraine Update (22:10)

• Industrials Inch Higher (23:21)

Here are Ivanhoff’s thoughts:

Inflation continues to come down. Stocks keep going up. The Nasdaq 100 just had one of its best quarters in history. A.I. and falling inflation have truly changed the market sentiment and the way companies spend. I don’t know if the current move has fundamental merits or if it is rational. I don’t know how long it is going to last. No one knows. Two things make sense in this tape:

1. Don’t fight uptrends. More money has been lost anticipating corrections than during the corrections themselves.

2. Don’t chase extended stocks. Find a low-risk entry point to participate. How to find one. Every time a rising stock has a pullback to its 10, 20, or 50-day moving average, it offers a low-risk opportunity where we can risk $1 to make $3-10. We don’t know in advance which ones are going to work but this is not the important part. What matters is quickly closing the positions that hit our stops, holding the ones that work, and even adding to the winners. It’s a very simple concept but it takes time and deliberate effort to train our mind to behave in a way that makes us money in financial markets. Setups and indicators have never been the solution in trading. You can have the best setups and the most sophisticated indicators and analysis and still underperform the S&P 500.

So what can stop this bull market? This is probably not the right question to ask. There is always something to worry about. If there aren’t, there wouldn’t be any buyers left. The Fed might decide that inflation is not coming down fast enough or it might perk up again and keep raising rates. Corporate earnings might not reflect the cheerful projections that the market has priced in. There are always many reasons but knowing about them is not going to make you money. There will matter when they matter and we will see it in the price action. No reason to guess when. The biggest risk for a money manager during a bull market is not participating in it properly – being underinvested or underperforming. This is why the dips in strong stocks tend to get bought.

Bull markets often correct through sector rotation. There was a glimpse of it last week. On the day tech stocks were under pressure, financials and energy stocks stepped up. Those rotations are bullish because they reveal that capital is not leaving the market but merely moving into better opportunities.

A few more reads:

The Stocktwits momentum 25 lists.

The Rotation Report

Have a great week.

Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. For full disclosures, click here.